During two weeks in July 2006, a gathering of scholars from African and American universities took place at Clark University as part of the first African Outreach Program, sponsored by The Institute for Economic Policy Studies. The Conference theme was “Democracy, Liberty and Development”. One of the highlights of the Conference was the keynote speech delivered on July 20 by Professor Joseph Pare, the Minister of Education in Burkina Faso, West Africa. Appearing before an audience made exclusively of University teachers, administrators and students, Minister Pare’s talk was devoted to the role of the African University in the process of development.
Minister Pare’s talk was enlightening not only because of what he said but also for what he did not. He eloquently identified the problems facing the African University drawing on his experience as a teacher, vice president and president of Ouagadougou University before being elevated to the post of the Minister of Higher Education of Burkina Faso.
In most of the African countries higher education institutions (elementary and secondary as well) were created, administered and shaped during colonial rules. As such, the African University, in the words of Minister Pare, “was like a house with a roof which is not adapted to the house. To make the roof fit with the house, changes have to be made to the plans.”
Of course, plans can be changed, and a new structure can be erected. But “how and by whom?”. Viewed in the context of economic development, this is precisely the question that has baffled development economists for more than a quarter of a century. Unlike many others, Minister Pare did not dwell on the colonial past neither did he absolve his countrymen from the lack of progress in securing better living standards for the population.
Let me state from the outset that I am not a “development economist”. However, one need not be one to enumerate the failure of this branch of economics to solve the problems of poverty and backwardness that plague so many countries in the globe.
The North-South dialogue that begun during the 1970’s was viewed by many as the first step towards a meaningful dialogue between the have and have not. For awakening the world consciousness to the plight of the South. That of course did not happen. Neither the North-South dialogue nor its successors embodied in the G-7(8) have made much headway in treating, in the words of Pare (referring to Africa), “a continent of desolation, a sick person without a guarantee of recovery.”
Economists and non economists alike have come to recognize that “development” is a challenge confronting every society, although at different times. It is a multidimensional process and not purely economics. Yet, with all the knowledge Universities have generated whether through writing, publishing* and teaching about development, we seem to have failed. But perhaps we have not. Knowledge generated by writing about development, consulting for development, has advanced the cause of development. Collectively we have come to recognize that “poverty and deprivation have proved to be robustly sustainable”, that, as Tullock put it, “it is not enough to argue that democracy will lead to greater economic progress”. We need to show that it does.
* I have counted over 600 articles written about development in Africa just over the past five years.
Tuesday, February 27, 2007
Thursday, February 22, 2007
Mandates and Bans: Is it Paternalism or “petty tyranny”?
Two headlines are making the rounds in the media: New York City ban on trans fats effective July 2008; and the state of Texas mandates, beginning in September 2008, that girls entering the six grade – girls age 11 and 12 – will have to be vaccinated against the sexually transmitted virus that causes cervical cancer.
The two issues although differ in terms of their effects on the health of the intended subject, both reek of the smell of paternalism. What is wrong with paternalistic legislations? In the first case, the ban on trans fats protect us from artery-clogging artificial trans fats, helps fight “obesity”, cut down on the time and the cost of dieting, going to the gym, visits to weight watchers clinics, and so on. Just like “Popeye” telling kids to eat spinach to build their strength and mothers telling their kids to eat their vegetables, the government is telling us not to eat food cooked in trans fats. Both at the private and public level, the intent appears to be the same – to protect us from ourselves. What is wrong with that? I will address the question later.
The second case, mandating girls 11/12 years old to be vaccinated against cervical cancer, although at the outset appears to be no more no less than mandating school-age children to be vaccinated against chickenpox, typhoid, whooping cough, the acts are not one and the same. The mandate in the cancer vaccine case is predicated on the assumption that teen age girls need to be protected from themselves – cervical cancer is a sexually transmitted disease, whereas in the second case no such protection is the justification for the vaccine.
The debate in media, print, the airway and on the internet, provide us with the opportunity to look closely at ourselves in relation to our government.
Economists, like people in other walks of life, have entered into the debate for they do have a stake in the outcome. The concern goes beyond a debate over whether a ban on trans fats or a vaccine against cervical cancer promote good health, but it goes to the heart of what the economic discipline is all about. Put differently: is the individual rational? Is the individual choice optimal? Economists are not all of one mind. Some of us are libertarian, championing free choice and individual responsibility, others are somewhat paternalistic who have and continue to argue that the individual may not always make choices that are in his/her best interest.
The ban on trans fats and the vaccine mandate could not have come at a better time for our profession. Economists have long maintained that government intervention that falls under the heading of “paternalistic” intervention is justified when “externalities” or third party effects are present. Cases like banning smoking in buildings is for the protection of non-smokers once it was established that second-hand smoking affects the health of non-smokers. In this and other third-party effect cases, economists argued that government involvement may be called for in situations where the party to the act does not bear the full costs associated with the action. Even there economists, notably Nobel Laureate Ronald Coase, find the government case weak when the possibility of bargaining between the parties involved is possible.
Third-party effect is not present in either the trans fats or the cancer vaccine cases. Not everyone will agree with this assessment. The argument will be advanced that obesity has a third-party effect. It imposes cost on society in terms of “national image”, crowding out in the delivery of health care, and misallocation of the economy resources. Likewise in the case of cervical cancer, the third-party effect can be measured by the cost to society for the loss of life of young girls and the resources that need to be allocated for the afflicted individuals.
The third-party argument, whether or not one accepts it, does not fall under the “paternalistic” ideology. Paternalism is predicated on the assumption that someone else knows what is best for you. That someone may be your mother or father or “big brother”. For parent to mandate that their children eat vegetable or abstain from performing a certain activity they have to back their act by coercion when persuasion fails (which most often does). Paternalism, in the form of a ban or mandate, carry with it coercion. This is the question that ought to be at the heart of the debate.
A new generation of economists has put forth the proposition that paternalistic intervention by governments or other institutions are needed to correct problems of self control. Paternalism is advocated by this group with or without coercion and independently of whether or not self control problems give rise to third-party effects.
Individuals are said to exhibit “bounded rationality”, “lack of self control”, do not always act in their best interest and the faster the profession acknowledge this, the better we should be able to accept paternalistic intervention, whether that be asymmetric, optimal or libertarian.
The jury is still out on which of these views will end up in main stream economics. For my part, I cannot dismiss entirely the notion of paternalism. As a mother I often dictated for my daughter rules that have to live by. For me, on behalf of my daughter and myself, I do not accept paternalistic intervention by the state that overrides choices I make for myself or for my child, given that such choices do not infringe on the choices of others or place costs (deprive others from the benefits) on them because of my action or lack of action.
In banning trans fats and mandating vaccines we seem to have forgotten individual and parents’ responsibility.
For those of us who argue for freedom of choice we by no mean overlook the fact that freedom has a price. That price is the responsibility of the act that we have chosen. If the individual lacks self control, he/she is undoubtly not free. Mandates and bans, paternalistic or not, will not restore his/her freedom. What we should be worrying about is how to enhance and not to curtail the freedom of those who are not fortunate enough to be able to exercise it.
The two issues although differ in terms of their effects on the health of the intended subject, both reek of the smell of paternalism. What is wrong with paternalistic legislations? In the first case, the ban on trans fats protect us from artery-clogging artificial trans fats, helps fight “obesity”, cut down on the time and the cost of dieting, going to the gym, visits to weight watchers clinics, and so on. Just like “Popeye” telling kids to eat spinach to build their strength and mothers telling their kids to eat their vegetables, the government is telling us not to eat food cooked in trans fats. Both at the private and public level, the intent appears to be the same – to protect us from ourselves. What is wrong with that? I will address the question later.
The second case, mandating girls 11/12 years old to be vaccinated against cervical cancer, although at the outset appears to be no more no less than mandating school-age children to be vaccinated against chickenpox, typhoid, whooping cough, the acts are not one and the same. The mandate in the cancer vaccine case is predicated on the assumption that teen age girls need to be protected from themselves – cervical cancer is a sexually transmitted disease, whereas in the second case no such protection is the justification for the vaccine.
The debate in media, print, the airway and on the internet, provide us with the opportunity to look closely at ourselves in relation to our government.
Economists, like people in other walks of life, have entered into the debate for they do have a stake in the outcome. The concern goes beyond a debate over whether a ban on trans fats or a vaccine against cervical cancer promote good health, but it goes to the heart of what the economic discipline is all about. Put differently: is the individual rational? Is the individual choice optimal? Economists are not all of one mind. Some of us are libertarian, championing free choice and individual responsibility, others are somewhat paternalistic who have and continue to argue that the individual may not always make choices that are in his/her best interest.
The ban on trans fats and the vaccine mandate could not have come at a better time for our profession. Economists have long maintained that government intervention that falls under the heading of “paternalistic” intervention is justified when “externalities” or third party effects are present. Cases like banning smoking in buildings is for the protection of non-smokers once it was established that second-hand smoking affects the health of non-smokers. In this and other third-party effect cases, economists argued that government involvement may be called for in situations where the party to the act does not bear the full costs associated with the action. Even there economists, notably Nobel Laureate Ronald Coase, find the government case weak when the possibility of bargaining between the parties involved is possible.
Third-party effect is not present in either the trans fats or the cancer vaccine cases. Not everyone will agree with this assessment. The argument will be advanced that obesity has a third-party effect. It imposes cost on society in terms of “national image”, crowding out in the delivery of health care, and misallocation of the economy resources. Likewise in the case of cervical cancer, the third-party effect can be measured by the cost to society for the loss of life of young girls and the resources that need to be allocated for the afflicted individuals.
The third-party argument, whether or not one accepts it, does not fall under the “paternalistic” ideology. Paternalism is predicated on the assumption that someone else knows what is best for you. That someone may be your mother or father or “big brother”. For parent to mandate that their children eat vegetable or abstain from performing a certain activity they have to back their act by coercion when persuasion fails (which most often does). Paternalism, in the form of a ban or mandate, carry with it coercion. This is the question that ought to be at the heart of the debate.
A new generation of economists has put forth the proposition that paternalistic intervention by governments or other institutions are needed to correct problems of self control. Paternalism is advocated by this group with or without coercion and independently of whether or not self control problems give rise to third-party effects.
Individuals are said to exhibit “bounded rationality”, “lack of self control”, do not always act in their best interest and the faster the profession acknowledge this, the better we should be able to accept paternalistic intervention, whether that be asymmetric, optimal or libertarian.
The jury is still out on which of these views will end up in main stream economics. For my part, I cannot dismiss entirely the notion of paternalism. As a mother I often dictated for my daughter rules that have to live by. For me, on behalf of my daughter and myself, I do not accept paternalistic intervention by the state that overrides choices I make for myself or for my child, given that such choices do not infringe on the choices of others or place costs (deprive others from the benefits) on them because of my action or lack of action.
In banning trans fats and mandating vaccines we seem to have forgotten individual and parents’ responsibility.
For those of us who argue for freedom of choice we by no mean overlook the fact that freedom has a price. That price is the responsibility of the act that we have chosen. If the individual lacks self control, he/she is undoubtly not free. Mandates and bans, paternalistic or not, will not restore his/her freedom. What we should be worrying about is how to enhance and not to curtail the freedom of those who are not fortunate enough to be able to exercise it.
Wednesday, February 21, 2007
A Reflection on the life of a Teacher, Richard A. Musgrave (1910-2007)
There is no higher tribute one can offer than a tribute to a teacher.
Professor Richard A. Musgrave was my teacher. I was privileged to be his pupil in 1959 at the University of Michigan. There I was fortunate to study Public Finance with one of the giants in the field. Indeed, Professor Musgrave was the father who, in my view, not only gave birth to the study of the Public Sector as a field, an important field in Economics, but also nurtured it to make it vibrant and exciting for students.
On January 22, I was on my way to attend a Memorial Service for Milton Friedman, the 1976 Nobel Laureate in Economics, when I learned of the passing of Professor Musgrave. I do not know how to describe the effect such news have had on me. Life and death are events we live with every day. We face and welcome new born and mourn those who leave us behind. As one moves through life stages, one looks backward with nostalgia and forward with anticipation. One’s death, although remains in the shadow, is never far away from one’s thought. But the death of a teacher was never in the card.
A Teacher, an inspiring teacher, always live. Live in the heart, soul, writing and teaching of his pupils. I as a student have never contemplated the death of such a teacher.
As I continued the drive towards the Stanford University Auditorium, I find myself transported back to the time and place where I have first met Professor Musgrave.
I arrived to the University of Michigan after graduating from Cairo University. I was quite versed in the field of Economics and I have learned something about taxation by taking a course at Cairo University Law School. Taxation or the theory of the Fisc as it was called was not in the proper province of Economics. It was something lawyers study, presumably to argue for or against tax laws and tax treaties. I found tax laws a boring subject and had no desire to pursue it further. My interest was in the study of Micro theory and business cycle theory. But then I met Professor Musgrave. He was assigned to be my advisor. I found out that he offered a seminar in Public Finance. I had no idea what Public Finance was about, but his enthusiasm, his brilliance touched me like nothing else before. I went to his seminar and like my fellow students we were in awe with his teaching. Not only did he teach us what the economics of the public sector is all about, but he did so with such passion bordering on religion. Looking back, I still remember him pacing back and forth in the class room trying to explain to us what has by now become the standard model in the study of the public economy – The Three Branch Model. We were taught that governments not only have the responsibility to address market failure, but must do so without sacrificing efficiency or adversely affect private initiative. But Professor Musgrave’s passion went beyond that. He saw government as a benevolent institution. Its scope of activities does not stop with the allocation of society resources or the stability of the economy, but also to insure a modicum of fairness and equity. True this was perhaps a difficult and most controversial role one would ascribe to the public sector, but Professor Musgrave’s passion for fairness and equity have spilled over to all of his students not only as they began to think about the role of the public sector, but throughout their academic life. Whether one accepted or rejected the role of distribution – one of the three branches in Musgrave’s model, one can neither shrug off such a role nor shy away from addressing it.
Professor Musgrave has inspired many of his students to pursue the study, teaching and writing about the economics of the public sector. His many contributions as a teacher, educator and scholar have shaped my professional interest in Public Economics. Like many of his students, I have tried to share with my students some of his enthusiasm for knowledge about public sector behavior and his dedication to improving the process of governance. Forty six years later, in 2005, I found myself calling on Professor Musgrave to share with us his reflection on his basic theory. Professor Musgrave graciously accommodated my request by contributing a paper (Chapter 1, Public Finance and the Three Branch Model, pp. 3-8) to the Elgar Companion to Public Economics (2006), which was co-edited by myself and Richard Cebula. In the contribution, Professor Musgrave have reopened “that treasure box of ideas that have stamped the development of Public Finance and (his) vision of what the field should be about”. Professor Musgrave have reiterated his belief that “the three branch model provides a useful framework in which to separate the basic concerns of Public Finance and their distinct analytic. This perspective, as I saw it half a century ago, still stands.” (p.7)
A personal note: Professor Musgrave, you shall be missed. But your words, your passion and enthusiasm for teaching and the pursuit of a just society will forever live. They still guide all of those who seek the knowledge about the public sector as they have guided me through my professional career. On behalf of my students I thank you.
Milton Friedman (1912-2006)
The Global economy mourns the passing of a great man and an exceptional scholar.
Milton Friedman, more than anyone, brought the concepts of freedom, choice and the efficiency of the market into our everyday lives. As economists, we tend to view the world around us in a structured framework. Friedman taught us to reach beyond the discipline structure to engage the ordinary individual in a dialogue about his expectations of what the public sector “can” deliver, and what it cannot or should not. Above all, to impress upon him/her that liberty and freedom cannot be traded or sacrificed for nobler causes for there are none more worthy.
Milton Friedman not only taught us good economics, but also inspired us to teach good economics. His ardent support for political and economic freedom has changed the political and economic landscape of the international economy. It is not an exaggeration to state that in the last half of the 20th century, Milton Friedman name has been synonymous with freedom and democratic reforms that have swept so many nations in the international economy. Those of us who were privileged enough to know him shall miss him.
My thoughts and condolences go to his wife Rose Director Friedman. In this time of sorrow, Rose, his children, grandchildren and great-grandchildren hopefully will have comfort and solace in the knowledge that Friedman has touched so many lives in so many nations. He has brought to us light and enlightenment that shall endure. Great men do not die, neither do they fade away. His thoughts and teaching will forever endure.
Milton Friedman, more than anyone, brought the concepts of freedom, choice and the efficiency of the market into our everyday lives. As economists, we tend to view the world around us in a structured framework. Friedman taught us to reach beyond the discipline structure to engage the ordinary individual in a dialogue about his expectations of what the public sector “can” deliver, and what it cannot or should not. Above all, to impress upon him/her that liberty and freedom cannot be traded or sacrificed for nobler causes for there are none more worthy.
Milton Friedman not only taught us good economics, but also inspired us to teach good economics. His ardent support for political and economic freedom has changed the political and economic landscape of the international economy. It is not an exaggeration to state that in the last half of the 20th century, Milton Friedman name has been synonymous with freedom and democratic reforms that have swept so many nations in the international economy. Those of us who were privileged enough to know him shall miss him.
My thoughts and condolences go to his wife Rose Director Friedman. In this time of sorrow, Rose, his children, grandchildren and great-grandchildren hopefully will have comfort and solace in the knowledge that Friedman has touched so many lives in so many nations. He has brought to us light and enlightenment that shall endure. Great men do not die, neither do they fade away. His thoughts and teaching will forever endure.
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